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Sell! Sell! Sell! The tax credit stampede gets rolling

Posted by Scott Van Voorhis April 8, 2010 09:28 AM

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With the $18 billion home buyer subsidy set to go poof April 30th, the herd mentality is taking over.

And for any would-be buyer out there foolishly rushing to get in under the tax credit deadline, I have a simple message for you: Step back, take a deep breath, and note very carefully what sellers are doing.

Some sellers are panicking, and unlike buyers, they may actually have good reason to do just that.

Just take a look at this item from the Calculated Risk blog, which notes that Bank of America is projecting a 600 percent increase in foreclosures by year end.

That's a jump from 7,500 foreclosures a month to 45,000 by December, the blog reports, citing statements made by a top bank executive at a recent conference.

Given what's ahead, there is now a rush by some sellers to get out before the tidal wave hits.

Fannie Mae and Freddie Mac plan to auction off hundreds of foreclosed homes in Las Vegas and Phoenix in the next few weeks, with a big event planned right before the deadline hits on the weekend of April 24.

For that matter, Realtors across Massachusetts and across the country are preparing to turn out in droves this weekend and put on as many open houses as they can in hopes of racking up last minute sales before doomsday hits on April 30th.

The bait of course is the tax credit, with buyers assured they will still have time to qualify if they put a home or condo under agreement before midnight strikes on April 30th.

Yet it doesn't take a rocket scientist to figure out the housing market, after being propped up by a federal government that is now slowly starting to back away, will face some serious challenges in the months ahead.

And foreclosures - with CNBC doing its best to whip up a frenzy - are just the tip of the iceberg here.

Even the Realtor industry acknowledges the sunsetting of the tax credit will dampen buyer demand, while the Fed just ended a key trillion-dollar program that helped keep interest rates low.

Yes, interest rates may rise, but if you are a buyer, time may be on your side right now, at least over the next several months.

The same can't be said of sellers.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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